A bank can only make a loan if it has
A) a creditworthy customer willing to pay a high interest rate.
B) permission from the Federal Reserve.
C) excess reserves.
D) reserves equal to its deposits.

Question

Quizplus · Accepted Answer

A bank can only make a loan if it has excess reserves available. Excess reserves are the amount of funds a bank holds beyond what is required by law or regulation, and they are used to provide for unexpected needs or to make loans to customers. A creditworthy customer, high interest rate, permission from the Federal Reserve, or reserves equal to deposits are not necessary for a bank to make a loan.

A Bank Can Only Make a Loan If It Has